PRECIOUS-Gold below $1,650/oz, down 1.1 pct on fund selling

* Breaks below 200-day moving average first time in 4 months

* Gold down 3 pct in last three days, options turn bearish

* Hedge fund selling, better U.S. GDP growth weigh

* RSI shows gold oversold for first time since May

* Coming up: U.S. personal income, core PCE price index Fri.

(Adds markets details, updates prices)

By Frank Tang

NEW YORK, Dec 20 (Reuters) - Gold plunged below $1,650 an

ounce on Thursday, down more than 1 percent, and to its lowest

since August as heavy liquidation by hedge funds and signs of an

improving U.S. economy triggered selling.

The metal broke below its 200-day moving average, which it

had held for four months, as safe-haven bidding faded following

a government report that showed the U.S. economy grew at a

faster-than-expected 3.1 percent annual rate in the third

quarter.

Silver also dived over 3 percent and platinum group metals

each fell around 2 percent.

Also weighing on gold was news Morgan Stanley Smith Barney

has recommended its financial advisers pull client money out of

long-time gold bull John Paulson's funds. The announcement

stirred speculation the billionaire hedge-fund manager might

need to liquidate gold investments.

"There is a concern among the hedge funds that they will

have more redemptions because of the fact that they

underperformed the markets this year as a whole," said Jeffrey

Sica, chief investment officer of SICA Wealth Management which

has over $1 billion in assets.

Spot gold was down 1.1 percent at $1,647.40 an ounce

by 4:13 p.m. EST (2113 GMT), having hit a low of $1,635.09,

which marked the weakest since Aug. 22.

Silver, which often displays higher volatility than

gold, was down 3.4 percent to $29.94, having hit a four-month

low of $29.60 an ounce.

Bullion has now fallen 3 percent in the last three sessions,

partly pressured by uncertainty related to efforts by U.S.

legislators to clinch a deal to avert automatic tax hikes and

spending on Jan. 1.

Gold has failed to benefit as a safe haven even though a

year-end deadline for the "fiscal cliff" looms. On Thursday,

Republicans in the U.S. House of Representatives pushed ahead a

"fiscal cliff" plan that stands no chance of becoming law as

time runs short to reach a deal with President Barack Obama to

avert a Washington-induced economic recession.

After this week's sharp sell-off, bullion is on track to end

the fourth quarter down 7 percent, which would be its worst

quarterly performance since the second quarter of 2004.

OPTIONS, TECHNICAL OUTLOOK BEARISH

Heavy concentration of put options under $1,700 an ounce

added significant pressure on the underlying gold futures. Many

investors have accumulated puts at lower prices to protect their

gains in gold futures.

On charts, Thursday's sell-off sent gold's 14-day relative

strength index to 25, the area which is considered by most

analysts as oversold, for the first time since May.

U.S. COMEX gold futures for February delivery settled

down $21.80 at $1,645.90 an ounce, with volume in line with its

30-day average, preliminary Reuters data showed.

Year to date, gold was up around 5 percent. It was up as

much as 15 percent earlier this year on worries that monetary

easing by the Federal Reserve could spur inflation.

Among platinum group metals, platinum dropped 2.7 to

$1,544.50 an ounce, while palladium slipped 2.1 percent

to $676.50.

4:13 PM EST LAST/ NET PCT LOW HIGH CURRENT

SETTLE CHNG CHNG VOL

US Gold FEB 1645.90 -21.80 -1.3 1636.00 1672.80 176,159

US Silver MAR 29.678 -1.438 -4.6 29.635 31.275 74,103

US Plat JAN 1546.20 -46.70 -2.9 1542.00 1595.50 18,544

US Pall MAR 680.25 -18.10 -2.6 672.00 696.50 6,433

Gold 1647.40 -19.16 -1.1 1635.09 1671.51

Silver 29.940 -1.050 -3.4 29.600 31.220

Platinum 1544.50 -42.49 -2.7 1545.50 1592.75

Palladium 676.50 -14.54 -2.1 675.50 693.00

TOTAL MARKET VOLUME 30-D ATM VOLATILITY

CURRENT 30D AVG 250D AVG CURRENT CHG

US Gold 184,570 180,432 174,396 12.98 -0.12

US Silver 87,807 58,723 52,585 22.2 1.55

US Platinum 25,957 10,653 8,902 17.86 -0.55

US Palladium 6,483 6,221 4,737

(Additional reporting by Jan Harvey and David Brough in London;

Editing by James Dalgleish and Bob Burgdorfer)

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